Month: July 2019

In order to better understand the SiFi contract as a whole, I wrote to Vince DeLeonardis, the City Attorney asking that he address the points raised by Common Sense, Saratoga. I admire Vince enormously for the clarity of his thought and writing. I think if you take the time to read his email to me, you will agree.

John,
I have read the articles posted on the site referenced in your e-mail.

I find it interesting that the authors argue that the contract will create a “government-sponsored decades-long monopoly with SiFi Networks to lay a fiber optic network throughout the City” while, at the same time, questioning why the City would allow for “a new fiber optic transmission backbone that parallels already existing fiber optic installations.”

Under the most basic definition, a “monopoly” is understood to mean the exclusive control of supply of a good or service. Thus, allowing for a fiber optic system which, as they claim, “parallels” an already existing system, is not creating a “monopoly” but is, instead, the very opposite. The arguments proffered clearly lack merit and, ironically, “common sense”.

The contract with SiFi simply allows for the installation of a fiber optic network system which will provide residents with an opportunity to receive multi gigabit technology in internet, voice, data and video services as an option, or alternative, to the services currently available to them. Contrary to the unfounded assertions contained within the article, residents are not required to “financially back” SiFi who, pursuant to the contract, “shall be solely responsible for the cost to design, construct and install the system”. Nor will the contract create, as they absurdly claim, a “fiscal noose around the necks of citizens, forcing them to pay more for less”. To be sure, allowing for increased opportunities fosters market competition, which generally results in a more favorable outcome for consumers as it incentivises companies to increase quality and/or decrease prices.

As with all contracts, there are risks. Here, those risks are overwhelmingly borne by SiFi, who will be incurring significant expense to design, construct and install the system. Their investment will only realize a return if the system is capable of supporting delivery of the service in a manner and at a price point that will generate customers or “subscribers”. If, however, SiFi “doesn’t deliver a working system”, as is apparently the worry of the aforementioned authors, then there will be no subscribers and SiFi’s investment will be lost. Such an event, although unlikely, would indeed be unfortunate as the residents would not have the additional alternative to the services currently available to them that the contract intended to provide. It would not, to be clear, result in any liability for Saratoga Springs, let alone the “enormous liability” that they misguidedly assume.

In the event of a breach or default, the rights and remedies of each party are outlined in Section 7 of the contract and, ultimately, depends upon the nature of the breach and when such breach may occur. If the breach occurs in the manner outlined in 7.1.2(i) or (ii) and is not cured during the applicable cure period, the City may terminate the contract. If the breach occurs in the manner outlined in 7.1.2(iii) or (iv), and likewise not timely cured, the City may terminate the contract and shall have theoptionto either purchase the fiber optic network which has been installed at the point of such breach or allow SiFi to continue operations relative only to same. The City retains full authority over any extensions or further installation of the network beyond that point.

During the term of the contract, SiFi is obligated to install the system “in order to make the delivery of service over the system available toallpremises within the boundary” (emphasis added). Exceptions are only if there is a lack of legal right, title, interest or authority to access property or there would be an incremental material cost to access property or install the system that is at least 20% greater than the average cost associated with providing the service to all other premises within the boundary. SiFi shall have access to the public right of way to install the network, but shall be fully responsible for returning same to the condition it was in prior to construction, including “resurfacing roadways and curbing, regrading and reseeding grass areas, and restoring sidewalks and other surfaces to their original condition.” SiFi shall have right, title and ownership of the system during the term of the contract and, following termination or expiration, SiFi will have the opportunity to remove the system or relinquish title to the City, which can then possess, license, sell or otherwise transfer rights to the system.

Ultimately, the contract with SiFi will provide for an opportunity for the public to enjoy alternatives. There is no obligation or requirement imposed upon any resident to become a subscriber to the service. Nor are there costs, risks or liability in the manner so sensationally described in the referenced articles.

I hope I have sufficiently addressed your questions. However, should you require anything further, please do not hesitate to contact me.

The Saratoga Springs City Council has entered into a contract with SiFi Networks to provide Fiber Optic connections to the entire city. The issues are complicated, and given the scope of the project there are legitimate issues that people can argue about. A lot of work went into drafting the contract and given the potential benefits along with the risks, a thoughtful review is very much in order.

In this post I will be looking at those issues but as usually happens these days the White Walkers have launched a social media campaign that cynically misrepresents the agreement. It shrilly proclaims the agreement as a disaster of extreme proportion.

The vehicle for the attack is a pair of articles published on the website, “Common Sense, Saratoga (CSS)”.

The tone should by now be familiar to the readers of this blog. They write:

“More on the Worst Contract in City History”

[JK: Just as “Some things are too good to be true”…somethings are too bad to be true.]

It has the bravura tone so commonly invoked by our President where things are either the best or worst in history.

The articles make a stunning accusation. According to the CSS authors, if SiFi is unable to fulfill its responsibilities in the agreement, the only option the city would have to extricate itself from the contract would be to pay SiFi all the costs SiFi has incurred plus ten percent.

Here is how they put it:

“If the City wants to terminate the contract, even if the contractor doesn’t deliver, they can only do so only (sic) by paying all investments, expenses, plus 10%.”

This is simply untrue. Below is the language from the contract along with an analysis a friend who is a lawyer wrote for me. The bottom line is that if SiFi fails to comply with certain benchmarks and standards the city can exercise its right to terminate the contract in one of two ways. It can:

1. Purchase whatever SiFi has built to that point for the cost of what SiFi has done plus ten percent.

Or

2. Walk away from the agreement. SiFi may continue to operate using however much of the network it has built but it no longer has a right expand its network using the city’s right of way.

So, to be clear, the city is not obligated to buy the network.

CSS also alleges that the contract does not contain language that would require SiFi to serve the entire city. This is also untrue.

I find it interminably frustrating that these people continually exploit social media taking advantage of people by spreading this kind of disinformation.

Readers may recall that I asked the founders of CSS (Gordon Boyd, Ann Bullock, and Bob Turner) who wrote these articles and, if they had the assistance of an attorney, who that attorney was. I have still not had an answer.

Their piece does raise legitimate concerns about the length of the contract (30 years with an option for another 30) and questions about how future developments in technology might affect the value of the network.

The contract also provides unusually generous terms for allowing delays in the progress of the project.

Why Such Generous Terms

The advantage of the proposed network would be its speed. Fiber optics sends data in the form of light through cables. This is much faster than the older technology. Verizon has been constructing networks called Fios using this technology.

SiFi would lay the fiber optic cable and construct electronic stations to facilitate the movement of data. They would not provide the actual web services (ISP) to the residences and businesses. SiFi would provide interested companies use of their network to provide these services for a fee. These companies would in turn pass the costs on to their customers.

Spectrum would continue to offer its services to the city but now they would have competition.

This model has already been implemented in urban environments like New York City. Up to now the cost of providing such services in less dense environments like Saratoga Springs was not financially viable.

Advances in the technology of laying cable and in downsizing the electronic infrastructure to support the cables has changed the playing field.

Still this technology has never been used in the U.S. to construct a fiber optic network on a smaller scale like Saratoga Springs. In addition to Saratoga Springs, SiFi has agreements with Salem, Massachusetts; Fullerton, California; and East Hartford, Connecticut.

One of the central appeals is that most of the risk is with SiFi. SiFi is carrying the entire cost of constructing the network. The cost to the city for this endeavor is minimal.

As they say, you get what you pay for. As the city is not paying for the building of the network, their leverage over the project was minimal. As delays and problems with large networks are inevitable, SiFi negotiated an agreement that provided them with considerable protection for delays. SiFi also insisted on a very long contract to insure they would get a generous payback on their investment.

The protection to the city is based on the logic that SiFi must successfully build a product that has the features that consumers want and that is priced to be competitive not only against Spectrum which is their competitor today, but to whatever other technologies are developed in the future. In addition, if they want to expand their business to other communities in the future, they need customers like Saratoga Springs to be happy.

If the White Walkers (CSS) want to effectively challenge this contract, they need to avoid baseless accusations and, more importantly, they need to address the reasoning why SiFi needs to make the project a success.

This is an the analysis by the attorney as regards to terms available to the city should it terminate its contract with SiFi.

The rights and remedies of each party in the event of a breach or default under the Agreement are outlined in Section 7 of the Agreement, and ultimately depend upon the nature of the breach or default and when that breach or default occurs.

Subsection 7.1.2 (i) of the Agreement provides that when a breach or default bySiFiNetworks (“SiFi”) isotherthanone occurring in the manner described in:

(a)Subsection 7.1.2(ii) (involvinga failure to commence “Construction” on or before the “Construction Commencement Deadline” or with the applicable cure period);

(b)Subsection 7.1.2(iii) (involvinga failure to achieve “Substantial Completion” of the “System” by the “Construction Completion Deadline” or within the applicable cure period);or in

(c)Subsection 7.1.2 (iv) (involving a situation in whichat any time after “Substantial Completion” of the fiber optic system is achieved, nointernet, voice, date, or video service of any kind is capable of being provided over the system for a period in excess of 120 consecutive days,andneitherSiFinor its lender(s) have subsequently restored such capability within the applicable cure period);

thenifSiFifails to cure any actual noncompliance or default as provided inSubsection 7.1.1 of the Agreement, the City may (A) seek specific performance of any of the provisions of the Agreement which lends itself to such a remedy as an alternative to money damages,or(B) seek money damages fromSiFi, or (C) terminate the Agreementand seek any and all rights and remedies available to the City at law or in equity.

Subsection 7.1.2 (ii) of the Agreement provides that ifSiFifails to commence “Construction” on or before the “Construction Commencement Date” in accordance with the preceding provisions of Section 7.1 of the Agreement,and neitherSiFinor its lender(s) have subsequentlycommenced “Construction”of the subject “System” within the applicable cure period, the City may “terminate [the] Agreement by written notice to [SiFi] and its lender(s) and neither party shall have any liability or obligation under [the] Agreement.”

Subsection 7.1.2 (iii) of the Agreement provides that ifSiFifails to achieve “Substantial Completion” of the “System” by the “Construction Completion Deadline” in accordance with the preceding provisions of Section 7.1 of the Agreement, and neitherSiFinor its lender(s) have subsequently achieved “Substantial Completion” of the “System” within the applicable cure period, the City may “terminate [the] Agreement by written notice to [SiFi] and its lender(s).”

Subsection 7.1.2 (iii)of the Agreementfurther provides that in the event of termination pursuant to that subsection, the City shall within 60 days of the effective date of that terminationelecttoeither(A) purchase the “System” by paying toSiFiby wire transfer in immediately available funds within 120 days of the effective date of the termination a sum equal toSiFi’scosts of designing, financing and constructing the “System” for use in the City,plus 10% of such costs, upon which payment “neither party would have any liability or obligation under the Agreement,”or(B) permitSiFito “continue all network operations necessary to maximize useof theexistingFON [fiber optic network] in accordance with the Agreement.” (Emphasis added). Subsection 7.1.2 (iii) additionally provides that if the City elects alternative (B), the City “shall however have authority over all extensions of the FON in the Public Way.” (Emphasis added).

Similarly, Subsection 7.1.2 (iv) of the Agreementstatesthat if at any timeafter “Substantial Completion” of the subject fiber optic system is achieved, no internet, voice, data, or video service of any kind is capable of being provided over the system for a period in excess of 120 consecutive days, and neitherSiFinor its lender(s) have subsequently restored such capability within the applicable cure period, the City may terminatetheAgreement by written notice toSiFiand its lender(s) and then within 60 days of the effective date of that terminationelecttoeither(A) purchase the “System” on the same terms and conditionsspecifiedinSubsection 7.1.2 (iii)above, or (B) permitSiFito “continue all network operations necessary to maximize use of theexistingFON in accordance with [the] Agreement.” (Emphasis added). And as in Subsection 7.1.2 (iii) above, Subsection 7.1.2 (iv) provides that if the City electsalternative(B) toapost-termination purchase of the “System,” the City “shall however have authority over all extensions of the FON in the Public Way.” (Emphasis added).

In today’s (July 26, 2019) edition of the Times Union, Saratoga Springs Democratic candidate for Commissioner of Public Safety Kendall Hicks denies that he physically abused his girlfriend, Mellisa Gapp. Hicks repeated the defense offered by the spokesperson for his campaign Robert Millis that the incident was a simple misunderstanding. Hicks called the charges “political.”

An odd thing happened this week. People found on their Facebook pages a “community news forum” notice from the website “Common Sense, Saratoga”. It solicited their help in a petition drive to get a new version of the city manager charter on the November ballot but curiously didn’t make the actual charter available to potential petitioners or the public whose signatures they would be soliciting . It told readers that:

1. The city would be divided into six wards with one representative from each ward.

2. The ward representatives would serve two year terms.

3. The mayor would be elected city wide.

4. The mayor would serve a four year term.

5. 2,000 valid signatures would have to be gathered to get the charter on the November ballot.

6. They had only until the end of this month (less than ten days) to submit the petitions for certification.

People were informed that they should send any questions to SaratogaCharter2019@gmail.com.

Conspicuously absent from this notice was where people could find a copy of this proposed charter to read.

Interestingly the news feed disappeared from people’s Facebook page and as of the time I am writing this has not reappeared. None of this information is on their website or their Facebook page.

I guess I am old school but I don’t understand how anyone would sign a petition to get a charter on the ballot if they were not familiar with its content.

The Common Sense, Saratoga webpage lists four people as founders. Of the four I have the email addresses for three of them: Gordon Boyd, Ann Bullock, and Robert Turner. I sent an email to them and to SaratogaCharter2019@gmail.com asking the following questions:

1. Who wrote the new charter?2. Who approved the new charter? (Is there some kind of structured organization?)3. Where can someone get a copy of the new charter?4. Where can someone get a copy of the petition that is being circulated?5. Why did you wait until less than two weeks before state law requires the charter petition to be submitted to begin circulating a petition?6. Why didn’t you involve the public in a discussion of your proposal before finalizing it?

I would have thought that in the interest of transparency and assisting the public in understanding their proposal and the process they are going through that the backers of this measure would have already posted all of this information along with a copy of the proposed charter before starting their petition drive.

I actually don’t think there is anything conspiratorial about what would, at first glance, suggest secrecy. My experience with the people behind this project is that transparency is just not important to them. They are so imbued with the rightness of their campaign that it does not occur to them that people deserve to have this information. They expect the public to just blindly trust what they have produced because they are so convinced of its merits.

I will be posting a screen shot of the news feed that disappeared plus their draft ward map shortly.

I received the following email from Robert Millis on behalf of Kendall Hicks:

Our statement remains, as-published.

Further, I fail to see the merits of your “radically inconsistent”claim.

The fact is: the witness failed to appear and testify under oath, the alleged victim denied the narrative, the DA felt it wouldn’t hold up in court and a Judge concurred. Charged were dropped is the bottom line. Later, a Military review and agreed and took no disciplinary action of any kind.